Following a public hearing (OrJorTor. 55/2023) on the issuance and offering for sale of sustainability-themed bonds by small- and medium-sized enterprises ("SMEs") and startups held by the Securities and Exchange Commission ("SEC") which ended on 16 January 2024, SEC gathered feedback and suggestions from stakeholders to revise the relevant regulations on the issuance and offering of sustainability-themed bonds. The revisions aim to support SMEs and startups to raise funds through sustainability-themed bonds via crowdfunding channels and private placements.
In addition, this would encourage SMEs and startups to quickly adapt and participate in business development in the sustainability sector, which is a key component of the strategy to conduct business operations in a way to reduce sustainability risks, upgrade the capability of competition, and help the country to achieve the goal of net zero greenhouse gas emissions.
Accordingly, SEC issued announcements to revise the criteria for the issuance and offering of sustainability-themed bonds. The revisions took effect on 1 April 2024. The main points of the revisions may be summarised as follows:
- Expanding the criteria for offering convertible debentures for SMEs and large enterprises by private placement approach (PP-SME) to support the issuance and offering of debt instruments for environmental conservation (green bonds), debt instruments for social development (social bonds) or debt instruments for sustainability (sustainability bonds); and
- Expanding the criteria for offering debentures through crowdfunding to support the issuance and offering of all types of sustainability-themed bonds.
In this respect, issuers of sustainability-themed bonds are still required to disclose and report information to investors regarding sustainability aspects, such as (i) the purpose for which the environmental and social funds will be used, (ii) the selection of projects for investment, (iii) progress reports on projects, (iv) the determination of business goals that are aligned with sustainability aspects, etc. This is to align the requirements with international standards, provide investors with comprehensive information for investment decision-making, and enhance credibility regarding the issuance of sustainability-themed bonds.
